Hanjin’s demise and the need for liner rehab

If you’d asked me at the start of the year who’d be the sacrificial lamb between Hanjin Shipping or Hyundai Merchant Marine (HMM), I’d have picked the latter every time.

Hanjin’s demise – the largest bankruptcy in container shipping history – was a result of being second in the queue for restructuring and meeting stiffer resolve from both government (chastened by the public’s mounting criticism of its billions spent to prop up ailing maritime industries) and charterers, who were determined to make an example of the line for fear that if everyone got away with what HMM had achieved in their charter negotiations they’d all be bust.

Hanjin creditors likened any fresh cash injections to “pouring water into a broken jar” as they walked away from the carrier this week. It’s arguable that “jar” had been even more cracked at HMM.

In 16 years I’ve been covering South Korean shipping the history of HMM has been far more tumultuous than Hanjin’s. Indeed, I’d go so far as to say Hanjin had decent people and systems in place. What it did not have, however, is a solid, responsible top tier of management – a criticism that can be levelled at all too many Korean conglomerates.

Also the decision by the controlling Cho family not to cave in to creditor demands and pump extra hundreds of millions of dollars into the line as demanded could be seen as tacit admission that there is no point throwing good money after bad – this container downturn is here to stay.

Summing up Hanjin’s predicament – and container shipping’s as a whole – rather neatly today, Drewry Maritime Equity Research quoted Nassim Taleb’s book Ten principles for a Black Swan-proof world: “Using leverage to cure the problems of too much leverage is not homeopathy, it is denial. The debt crisis is not a temporary problem, it is a structural one. We need rehab.”

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.


  1. Seems the industry is in desperate need of a “whatever it takes” pledge to be kept from smashing into innumerable tiny sharp pieces/ but I forgot banks are more save-worthy these days and generally safeguarded by the mechanics of ecosystem dynamics.
    A point of general admittance though: failure is an intrinsic part of history as it unfolds unto our known universe, thus shipping managers should better realise that no serious market restructuring can possibly be painless

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